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HOW TO AVOID VENTURE FAILURES CAUSED BY FACTORS, WHICH ARE UNDER THE CONTROL OF ENTREPRENEURS By Davies Henry Lanjesi May 2005.

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Presentation on theme: "HOW TO AVOID VENTURE FAILURES CAUSED BY FACTORS, WHICH ARE UNDER THE CONTROL OF ENTREPRENEURS By Davies Henry Lanjesi May 2005."— Presentation transcript:

1 HOW TO AVOID VENTURE FAILURES CAUSED BY FACTORS, WHICH ARE UNDER THE CONTROL OF ENTREPRENEURS By Davies Henry Lanjesi May 2005

2 Meet The Author DH Lanjesi- OPERATIONS MGR

3 CONTENTS: Introduction Introduction Research Question Research Question Study Objectives Study Objectives Propositions Propositions Research Methodology Research Methodology Findings & Discussions Findings & Discussions Conclusions Conclusions Questions from the Panel Questions from the Panel

4 INTRODUCTION: Venture failure rates range from 30 to 80 percent. Venture failure rates range from 30 to 80 percent. Failure has many definitions- Opposite of success Failure has many definitions- Opposite of success - Shortfall - Shortfall - Gap btwn vision & reality Failure can loom at any stage of venture life cycle Failure can loom at any stage of venture life cycle Failure is an opportunity for learning Failure is an opportunity for learning Prior failures shape future strategies Prior failures shape future strategies Reasons for failure are less widely discussed. Reasons for failure are less widely discussed. Failures are sometimes caused by factors which can be controlled by entrepreneurs Failures are sometimes caused by factors which can be controlled by entrepreneurs Success is found on the far side of failure. Success is found on the far side of failure. Knowing what can go wrong will minimize risk of failure Knowing what can go wrong will minimize risk of failure

5 Research Questions WHY DO BUSINESSES FAIL? WHY DO BUSINESSES FAIL?AND HOW CAN AN ENTREPRENEUR AVOID BUSINESS HOW CAN AN ENTREPRENEUR AVOID BUSINESS FAILURE? FAILURE?

6 Study Objectives Investigate Underlying causes of venture failure especially those under the control of an entrepreneur. Investigate Underlying causes of venture failure especially those under the control of an entrepreneur. Alert entrepreneurs about causes of venture failure thereby reducing possibility of their venture failures. Alert entrepreneurs about causes of venture failure thereby reducing possibility of their venture failures.

7 PROPOSITIONS: Proposition 1: Entrepreneurs can experience venture failure due to their failure to manage certain factors under their control. Proposition 2: Entrepreneurs can avoid venture failures by managing known causes of venture failure, which are under their control.

8 Research Methodology This is a secondary literature study.Articles on venture failures plus relevant chapters of several books were reviewed.

9 Findings and Discussions: Only way to totally avoid possibility of failure is never to start a business. Only way to totally avoid possibility of failure is never to start a business. Failure can only be understood in relation to people’s goals and expectations Failure can only be understood in relation to people’s goals and expectations Failure rate is higher for small businesses than for large businesses in USA. Failure rate is higher for small businesses than for large businesses in USA. Underlying causes of failure are similar for different businesses in USA. Underlying causes of failure are similar for different businesses in USA. Businesses will fail unless underlying causes are resolved Businesses will fail unless underlying causes are resolved 15,460 business failed in Japan in ,460 business failed in Japan in Both small and larger businesses failed in Japan Both small and larger businesses failed in Japan Reasons for failure are less widely discussed. Reasons for failure are less widely discussed.

10 Findings and Discussions: Almost all of the successful entrepreneurs have had significant failures in their life or business. Almost all of the successful entrepreneurs have had significant failures in their life or business. These successful entrepreneurs learn from their failures. These successful entrepreneurs learn from their failures. Owners and managers of small businesses lack expertise or experience to recognize problems/Failures at an early stage.They do not even know how to deal with these failures. Owners and managers of small businesses lack expertise or experience to recognize problems/Failures at an early stage.They do not even know how to deal with these failures. Underlying causes of failures can be controlled by the entrepreneurs. These causes include: Underlying causes of failures can be controlled by the entrepreneurs. These causes include: Inadequate Market orientation, Inadequate knowledge of operating a business, Lack of Cash, Growing too fast, Poor interpersonal relationship, Lack of strategic planning, Failure to innovate, Trying to Go It Alone, Poor communication, Failure to recognize own strengths and weaknesses,

11 Findings and Discussions: Underlying causes continued: Underlying causes continued: Failure To Seek And Respond To Criticism, Inability to build a team, Abundance Mentality,Failure To Build People’s Strength, Lack of Pro-activity,Inadequate entrepreneurial spirit Thus a total of sixteen (16) factors were identified during this study. Thus a total of sixteen (16) factors were identified during this study. These factors resemble very closely with reports in USA on “Big 10 obstacles to the success of small businesses”. These factors resemble very closely with reports in USA on “Big 10 obstacles to the success of small businesses”.

12 Conclusions: Failure is an opportunity for learning. Failure is an opportunity for learning. Business Success is dependent upon reactions of business failures Business Success is dependent upon reactions of business failures Knowing what can go wrong is essential to avoid business failure Knowing what can go wrong is essential to avoid business failure Success and Failure exist in relation to expectations Success and Failure exist in relation to expectations Most causes of failure are under the control of the entrepreneur. Most causes of failure are under the control of the entrepreneur. Entrepreneurs can avoid venture failures by managing known causes of failures which are under their control. Entrepreneurs can avoid venture failures by managing known causes of failures which are under their control.

13 Now members of the panels may ask some questions:


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